Lawmakers are scheduled to debate two critical bills before the end of the year that could, if no progress is made, take $300 billion out of the hands of consumers, The Washington Post reported Thursday.
The George W. Bush era tax cuts, if left unattended, would raise taxes across the board. In addition, lawmakers in the lame duck session could fail to extend unemployment benefits for 3 million workers.
Moody's Analytics Chief Economist Mark Zandi said, "Businesses and households would run for the bunker, and we'd be back in recession. I don't see how we could avoid it."
With midterm elections shifting power dramatically on Capitol Hill, some Republicans have said they would agree to a one-year extension of the tax cuts they vowed in campaign promises to save.
President Barack Obama has also indicated he would go along with a short-term extension of the tax cuts that pledged to continue for all but the wealthiest taxpayers.
"We all have an interest in growing the economy. We're not going to play brinksmanship," Obama said.